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Another Warning Letter For An Indian Pharma Company, What Could Be The Impact?

As we draw curtains on 2015, it is almost the dawn of worrying times for the Indian Pharmaceutical sector. It is raining warning letters for many India-based pharma companies. The latest to be hit is one of the most major pharma players in the country, Cadila Healthcare. The company saw a double digit slump in the stock market after the US Food and Drug Administration received warning letters for two of its units, the Moraiya formulation facility and Ahmedabad API facility in Gujarat.

In a statement issued to the Bombay Stock Exchange, the company said that, “there are no products in the US market which use Active Pharmaceutical Ingredient (API) of Zyfine (Ahmedabad) facility. We will respond to USFDA to address the observations within the statutory time permitted in the letter. We are committed to resolve all the issues and revamp our quality systems and processes as the top most priority.”

However this is not the first time that an Indian company is under the US FDA scanner. Sun Pharma had earlier received the US FDA warning in connection with violation of manufacturing norms in its Halol facility in Gujarat.This facility accounts for 15% of the company’s sales in US.This is in addition to the import ban on five of its other manufacturing facilities.

Another major Indian pharma player, Dr Reddy’s too got a warning letter a few weeks ago with regard to two of its manufacturing and formulation plants in Andhra Pradesh and Telangana respectively.

Switzerland based Novartis too received warnings for manufacturing practice violations in two of its India plants.

Apart from the major dent these warnings put on the stock price and the overall business and future revenue prospects, the bigger question is are the spate of these US FDA warnings to India-based pharma plants mere coincidence? Could it possibly be a reflection of the way business is being conducted in most manufacturing units dealing with critical products like pharmaceutical goods or is it signalling some major mal-practice that could be underway in many of these companies? Or is a conspiracy theory at play?

Well guess we need to wait for the end outcome and perhaps this also emphasises a need for better stock taking by our regulatory authorities in terms of giving the nod for establishing these manufacturing units and maintaining a better vigil on their operations and overall accountability.